PS I booted up win2k in a virtualbox and it was able to run sound and I could
install into it firefox and adobe flash so now I can watch youtube in that,

I've got sound in VLC & system sounds, but no utube sound.

You don't say what browser you are using and how that is configured. Some
people have it configured to have Mplayer or VLC play videos for example and
many people have Add-ons that may affect Flash. Also check the sound slider
below the Youtube video. Check other sites to see if this is a Youtube only
thing. Finally there is a separate Youtube Client in the repositories called
Minitube. You could install it and check to see if sound works in that or
try a different browser such as Chromium.

It seems when the sound was gone I couldnt play this

http://www.youtube.com/watch?v=qrO4YZeyl0I

but this could play
http://www.youtube.com/watch?v=2fmo1Sjn7dg

Further to this when I tried to play the soudn I could play before, it wouldnt
play anymore.

I tried to tplay the video I couldnt play before and it played, now when I go to
play an mp3 it doesnt play but makes a nasty sound.

Maybe your computer is censoring your music taste..

Since it works in Virtualbox then it is likely a setting in GNOME and not a
driver problem. If it did not work at all in Ubuntu then it would not work
in Virtualbox as Virtualbox is just an application. I would try it out using
different applications and try to figure out what works and what doesn't.
You might be able to pin it down because some applications use one backend
(Gstreamer) and another may use something different (Xine).

i have just discovered I am able to play this

http://www.youtube.com/watch?v=2fmo1Sjn7dg

after I move the main volvume dial from the speaker on system tray slightly, it
seems by somehow changing the volume I can play things.

Well gladfully it picked up this ok for all the Neo David Bowie fans

http://www.youtube.com/watch?v=J7UftStYuqE

Have you tried booting a live CD to see if it will play sounds? Could
be a hardware or a software problem and we need to figure out which.

Well its a software problem, sound seems to work fine now, it seems it just
needed some adjustments of the volume, it seems i cant move the bar nyond about
60% before it make a mess of the sound, thats strange... drivers for graphics
hardware can be imported from ATI but what about audio hardware? Can we get
better drivers for that or is it some other issue?

Install ASLA GUI through synaptic and play with the settings.

Remove PulseAudio first and see if that clears things up. PA does not work
well with some hardware and perfectly with others (like mine). People either
swear by it or at it.